Residential

Dissolution of Partnership in the Residential Apartment

In most instances, the residential apartment is the most significant asset which a couple will have accumulated in the course of their marriage. In most instances, at least one of the parties remains living in the apartment, together with the minor children; thus, it does not constitute an “ordinary” joint asset which is to be sold for the purposes of dividing it between the parties.

However, in principle, also the residential apartment is an asset to be equalised. Thus, regarding the residential apartment there is a collision of laws: on the one hand, the Land Act gives a partner in an apartment the right to demand dissolution of the partnership at any time. On the other, the minors are entitled to a roof over their head, and to protection from shocks that are contrary to their best interests.

How isPartnership in the Residential Apartment Dissolved?

On the assumption that the apartment is vacant, and that no alternative accommodation must be found for the minors and the parties, the best and most recommended path is to dissolve the partnership by way of sale on the free market, and to divide the consideration between the parties, after deducting the costs of the sale and mortgage (if any).

In situations in which there is a dispute surrounding the value of the apartment, the court can appoint a surveyor to appraise the value of the apartment.

In instances in which owing to a disagreement, the parties failed to sell the apartment, the court will appoint a receiver or receivers for the apartment, who will substitute for the owners and act to sell it.

It is noted, that at law, each one of the parties has a right of first refusal to buy out the other party’s share; even though such a transaction is exposed to disputes regarding the proper price to be paid. At times, this will be the preferred solution, as well as a platform to equalise the assets between the parties, where the “debts” of one towards the other, can be off-set from his or her share in the consideration for the apartment.

What if the Apartment is not Vacant?

In this instance, despite the right which the Land Act bestows on an owner of rights in an apartment to demand dissolution of the partnership, there are other provisions designed to protect the spouse and minors residing in it.

In the past, the courts refrained from ordering dissolution of the partnership, and ordered its postponement for the protection of the minors. Several year ago, the Property Relations Act was amended, and a section expressly enabling the courts to postpone the sale of the residential apartment for the purposes of equalising the assets between a couple, was inserted; so long as the court is not convinced that the spouse in possession of the apartment, and the minors residing with him or her, have alternative accommodation suitable to their needs.

On the other hand, this provision apparently bestows power on one of the parties who seeks to prevent dissolution of the partnership, thus delaying the conclusion of the dispute and even perpetuating it. Therefore, the court is required to exercise wide discretion on this matter.